Court backs USDA in axing GIPSA rules

Cows at a feedlot in Nebraska. A federal judge in St. Louis has rejected a lawsuit challenging the withdrawal of rules that allowed ranchers to challenge what they saw as unfair livestock prices.

USDA

A U.S. District Court has sided with the Trump administration’s USDA in withdrawing the Farmer Fair Practices Rules pushed through in the waning days of the Obama administration.

The controversial rules included an interim rule that would no longer require a showing of injury to overall market competition to claim a violation under the Grain, Inspection, Packers and Stockyards Administration law.

The rules, which were to go into effect in February 2017, were delayed by USDA and then withdrawn in October 2017.

The Organization for Competitive Markets filed a petition for review of USDA’s actions with the 8th U.S. Circuit Court of Appeals n St. Louis, Mo., in December of 2017.

“USDA’s conclusion that the interim final rule and proposed regulations would result in protracted litigation that ‘serves neither the interests of the livestock and poultry industries’ nor USDA is a rational reason not to adopt a proposed change of course,” the court stated in its opinion.

The court also stated that “from a political scientist’s perspective, this landscape is rather easy to describe.”

“In December 2016, the outgoing USDA administrators left their successors a time bomb,” rules that would increase USDA’s regulatory authority, an interpretation that had been consistently rejected by numerous courts of appeals for over 75 years, the appeals court judges stated.

The rules would have also clarified what GIPSA views as unfair trade practices and establish criteria for determining unfair practices in the poultry grower ranking system used by poultry processors.

On those proposed regulations, USDA stated it would take no further action but would continue approaching the elimination of specific unfair and deceptive practices on a case-by-case basis.

“Continuing this approach will better foster market-driven innovation and evolution and is consistent with the obligations to promote regulatory predictability, reduce regulatory uncertainty and identify and use the most innovative and least burdensome tools for achieving regulatory ends,” USDA stated when withdrawing the rules.

Most livestock and poultry producers strongly opposed the rules, contending they would have devastated their industries.

“They would have increased costs, stifled innovation and opened the flood gates for trial lawyers and frivolous lawsuits,” Tom Super, National Chicken Council’s senior vice president of communications, said.

Officials with the National Cattlemen’s Beef Association were not available for comment on Wednesday but in an earlier interview with Capital Press, Colin Woodall, NCBA senior vice president of government affairs, said the rules would cripple the cattle industry.

The last thing anyone wants is the federal government intruding in the marketplace telling industry what a fair price for cattle is, he said.

The rule would have allowed a producer to claim his price was unfair compared to another producer and given him the opportunity to sue the packer, the feedlot and even other producers who received premiums based on certain specifications, he said.

The rule would result in the loss of value-added programs and marketing opportunities and pushed the industry back toward commodity cattle, he said.

Officials at the National Pork Producers Council were also not available for comment but had earlier stated eliminating the need to prove injury to competition would have prompted an explosion of lawsuits by turning every contract dispute into a federal case subject to triple damages.

The associated costs and legal uncertainty likely would have caused further vertical integration in the industry — driving packers to own more of their own hogs, which would reduce competition, Ken Maschoff, NPPC past president, previously said.

The rules did have supporters in the farm community, including American Farm Bureau Federation, National Farmers Union, R-CALF and U.S. Cattlemen’s Association.